Investment conferences have heavily shed light on how the aftermath of the pandemic was felt properly throughout the last financial year. Record-breaking inflation & declining economies left investors stressed, wondering how to predict upcoming trends in a historically unstable market.
However, the new year ushers in when you, as an investor, need to take a breather & regroup. Reviewing portfolios & asset allocations can allow you to gear up for the upcoming market trends.
The popularity of digital currencies & sustainable investing is also growing as young investors take over the market. Macroeconomic factors such as inflation, interest rates, unemployment, and economic growth will also continue to play a role in investment decisions. With that in mind, here are a few trends MoRe 2.0 Conference suggests you keep an eye out for in 2023 -
Rising Interest Rates
The direct correlation between interest rates and inflation could be an issue to keep an eye on as an investor in 2023. Higher inflation comes with higher interest rates, causing a domino effect across multiple market sectors. As a consumer, your priority in such a market would be to save money. This, in turn, directly affects the demand for goods & services in the market, lowering inflation rates.
The stock market also feels a disturbance with high-interest rates. Borrowing money is more expensive in such a scenario, affecting companies & their output. As discussed at investment conferences, bonds, however, have an inverse relationship with interest rates. The higher the rates, the lower the price of your bonds & vice versa. As an investor, it is entirely valid to be worried in such scenarios.
However, long-term investments can be relatively secure in a market with higher interest rates. Here are a few ways to calm the storm during inflation in interest rates -
- During a decline of all other assets, such as equities & bonds, cash tends to be a safe keep to keep your investment strategy afloat. Accumulation of cash to purchase assets such as bonds to help you ride this wave of inflation out.
- Experts at post-COVID finance events advised that clearing off any existing debts can be a blessing when higher inflation rates come around. Variable-rate debts can increase with an increase in interest, causing you to borrow more. Increased borrowing in such a market can cause a decline in your assets over time. Hence, clearing off debts or financing them at lower rates can be crucial to surviving this inflation rate.
A Worrying Trend Of Layoffs
By now, you're probably aware of the mass layoffs trending globally, especially amongst the top firms. Global insurance & finance conferences like the MoRe 2.0 Conference play host to some of the most renowned industry leaders & experts. These experts, with a sense of urgency, have provided insight into the worrying number of layoffs in recent times & why that may continue to be the case.
This year's impending recession is a significant indication of a continuing trend of layoffs. An increasing number of layoffs directly decreases consumer spending. People losing their jobs naturally look to spend less to save money. This can reduce the spending power in the market, affecting the growth of an economy. Higher unemployment rates also have a direct impact as there's less consumer confidence & spending power, causing ripple effects throughout the market.
Keeping this worrying trend in mind, saving should become a priority without hesitation. Emergency funds, preferably in the form of cash, can help keep you afloat while you reevaluate and figure out the next move.
Roughly planning out your expenses for the foreseeable future not only saves you money but also provides a sense of calm during a time of expected disorganization. With how unstable the economy has been over the last year or two, it's safe to say that none of us are immune from experiencing impromptu layoffs.
Increased Market For Renewable Energy
Keynotes & panel discussions at top finance conferences have provided insight into the rapidly growing renewable energy market. The Inflation Reduction Act, introduced in 2022, is expected to heavily impact the renewable energy market, causing a heavy dip in energy prices over the long term and promoting the use of clean & renewable energy.
An increase in demand for renewable energy-based tech, especially solar panels, electric vehicles & others, may be noticed in 2023. There are a few reasons behind this trend, with the major ones being -
- Global shift towards investing in renewable energy - The hazardous effects of traditional energy sources have made them a steeply declining market, causing a gradual but steady shift towards renewable energy sources. With an expected dip of 46% in the fossil fuel market, governments are investing more & more toward developing renewable energy sources.
- Rising Market Share - Apart from the apparent reason to invest, being that it's vastly beneficial for the environment, renewable energy is also slowly claiming its own in the market. Over the last decade, renewable energy outperformed fossil fuels, generating returns of 192.3% compared to 97.2%.
In the last few years, renewable energy investment continued to yield higher returns in addition to being less volatile than the fossil fuel market. As opined by investors at top finance conferences, zero-emission projects have gained global traction from major manufacturing companies focused on playing the long-term game. With instability in the fossil fuel market share, renewable energy is a sector investors should be closely keeping an eye on.
- More Job Opportunities - Growth in the renewable energy sector opens up many job opportunities globally. This is backed up by the substantial increase in employment numbers in the renewable sector. An analysis of the year 2022 revealed 12.7 million people globally are employed in the renewable energy sector. This is an increase of roughly 700,000 jobs from the previous COVID-19-affected year. Investments will lead to a quicker and smoother transition for workers towards renewable energy from an inevitably declining fossil fuel industry.
Time To Consider Alternative Investmentsx
As an investor, you tend to prioritize regular investment options such as stocks, bonds & cash. However, with the unexpected financial turbulence experienced globally, it may be time for investors to integrate alternative investments into their portfolios. Real estates, hedge funds, and private equity are examples of alternative investments, acting as a safe keep in such times of uncertainty.
Although carrying higher risks, alternative investments do offer significantly higher returns. Experts at top finance conferences provide insight into how a key differentiating factor is their ability not to be affected by inflation & changes in the stock market, allowing investors to retain them during market instability. Alternative investments, such as real estate especially, can be an excellent source of second income for investors & consumers alike in times when mass layoffs are proving to be a significant worry.
However, a few key factors to consider when choosing alternative investments range from -
- Regulation & transparency rates are significantly lower than traditional investments.
- Liquidity in alternative investments is lower, making it difficult to exit and keeping your money tied up for longer durations of time.
- You might incur additional costs & higher fees when investing in alternative options as compared to traditional investment costs.
The Rise Of Hybrid Robo Advisors
As seen with any technological leap, there's initial hesitation to jump ship from traditional methods, especially during such turbulent times. However, post-COVID finance events have emphasized how 2023 poses to be the year of financial advisors going the route of automation. Advanced tech coupled with human support will provide you with time-saving & sound financial advice. If you're someone looking to start as an investor, reaching out for financial advisory might be a great platform to start off with.
With inflation and higher interest rates causing a decline in consumer spending, the cost-effective model of the robo advisor might be its most significant selling point. Effectively cheaper than traditional human advisors, robo-advisors allow you to automate multiple financial tasks such as planning, portfolio management, tax planning, etc. For investors in 2023, this may be the most cost-effective way to receive dependable financial advice & help them efficiently carry out their financial planning for the year.
Conclusion: What To Retain In A Nutshell!
With the ever-changing nature of the market, investors need to prioritize staying up to date with current market conditions. However, these are only some of the trends being noticed with the unstable nature of the market. It is also crucial for investors to be smart when it comes to portfolio diversification and alternative investments, amongst other concrete decisions, to bear any sudden economic changes.
As an investor or just someone looking for financial advice, the upcoming MoRe 2.0 Conference, held in Dubai & the USA in 2023, is the place to be! Experience industry leaders taking the stage to unravel challenges faced by the industry in their keynotes & panel discussions, along with personable networking to give you more insight into the world of finance & real estate. To learn more about our conference, refer to the website -www.more2conf.com
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